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Friday, November 9, 2007

Bernanke downbeat on economy

The US Federal Reserve chief has warned the country may have a difficult time curbing the inflation likely to be sparked by dollar devaluation.

Ben Bernanke noted the dollar's decline could give rise to higher import prices which in turn would lead to inflation.

He deemed the credit crisis, triggered by debtors defaulting on their loans to the banks, to be at the root of the dollar's nosedive.

He sounded further alarms that the recent turn of events in the US economy could send it into serious decline before the end of 2008.

Highlighting the issue of credit crisis, which he claimed has resulted in banks thinking twice when lending money, Bernanke said there was likely to be more "financial restraint on economic growth as credit becomes more expensive and difficult to obtain".